National fee-only advisers' group tightens its membership requirements

The National Association of
Personal Financial Advisors is tightening its membership rules and will no
longer allow members to own even a small stake in any financial firm that
charges commissions, Investment
News reported.

NAPFA, composed of fee-only
financial planners, notified its approximately 2,500 members in an e-mail
Thursday that it was rescinding the provision that allowed them to own up to 2
percent of a firm that generates transaction-based revenue.

Just 10 NAPFA-certified advisers
practice in the state, five of whom work at Syverson Strege & Co. in West
Des Moines, said Johnne Syverson, a principal with the firm. He said the change
will have no impact on himself or on four of his colleagues who are also NAPFA-registered
advisers, because his firm has no ties to fee-based firms.

"I wasn't even aware of this
2 percent exception until I read this today," Syverson said of the
Thursday email. Syverson said he doubts that any of the other NAPFA advisers
outside his firm have any ownership interests in firms that generate fee
revenue. Any who might would have to decide whether to give up their NAPFA
membership or end their ownership interest in the fee-based firm, he said.

The change resolves a difference
between NAPFA's fee-only definition and the one outlined in Certified Financial
Planner Board of Standards Inc. rules. The CFP Board says financial advisers
are fee-only if they only charge fees for their services and are not affiliated
with a firm that charges commissions, a rule that has caused much controversy.

"We're really trying to
eliminate a discrepancy between our membership standard and [the CFP Board's]
rules of conduct," NAPFA chief executive Geoffrey Brown said in an
interview with Investment News. "This change in alignment is really about
our members' commitment to providing financial services in a manner that is
open, clear and easily understandable for consumers. The 2 percent exception is
confusing."